The NSA has been targeting the Tor anonymising system to spy on its users, suggests a report.

German public broadcaster ARD said two Tor servers in Germany were actively being watched by the US spy agency.

Citing information given by official sources, ARD said almost anyone searching for Tor or installing it could be watched by the NSA.

Tor hides users' location and identity by randomly bouncing data through some of the machines making up the network.

Data is encrypted during the hops to better conceal who is visiting which page.

Information passed to ARD suggests the NSA has tapped into traffic to and from two German directory servers used by Tor to scoop up the IP (internet protocol) addresses of people who visited it.

Data passing in and out of these servers was vulnerable because it was unencrypted. Other directory servers might also have been watched.

The addresses the NSA grabbed were monitored via an analysis system it developed called XKeyscore, said ARD. XKeyscore works by snooping on information passing through the few exchanges around the world where data hops from one ISP to another.

Data grabbed from these sources was used to build up a a profile of the web browsing habits associated with those IP addresses.

Sites offering several other anonymising and privacy tools were also watched, said the ARD report.

"Merely searching the web for the privacy-enhancing software tools outlined in the XKeyscore rules causes the NSA to mark and track the IP address of the person doing the search," it said.

A spokeswoman for the NSA told news site Ars Technica: "XKeyscore is an analytic tool that is used as a part of NSA's lawful foreign signals intelligence collection system. Such tools have stringent oversight and compliance mechanisms built in at several levels.

"All of NSA's operations are conducted in strict accordance with the rule of law."

Russia has offered 3.9m roubles ($110,000; £65,000) in a contest seeking a way to crack the identities of users of the Tor network.

Tor hides internet users' locations and identities by sending data on random paths through machines on its network, adding encryption at each stage.

The Russian interior ministry made the offer, saying the aim was "to ensure the country's defence and security".

The contest is only open to Russians and proposals are due by 13 August.

Applicants must pay 195,000 roubles to enter the competition, which was posted online on 11 July and later reported by the tech news site Ars Technica.

Earlier this month, Russia's lower house of parliament passed a law requiring internet companies to store Russian citizens' personal data inside the country.

Russia has the fifth-largest number of Tor users with more than 210,000 people making use of it, according to the Guardian.
US-funded network

Tor was thrust into the spotlight in the wake of controversy resulting from leaks about the National Security Agency and other cyberspy agencies. Edward Snowden, the whistleblower who revealed the internal memos and who now has asylum in Russia, uses a version of Tor software to communicate.

Documents released by Mr Snowden allege that the NSA and the UK's GCHQ had repeatedly tried to crack anonymity on the Tor network.

I love how one 3 letter government agency spends money to make Tor as anonymous as possible while a different 3 letter government agency spends money trying to break it. Bureaucracies are so wonderful.

Also, big fat LOL @ Russia cloud-sourcing their own citizens to spy on themselves. $100k to decrypt Tor?? Russian Intelligence agencies aren't even fit to sniff the NSA's soiled jockstrap. They must get so jealous when Snowden tells them about how awesome the NSA is at this spy stuff.

These big fat cats are so funny. They sit in their chair and control society from a distance and when something comes along that they can't control, its a massive blow to their ego. The internet has liberated the people and most governments hate that about the internet.

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